In his keynote speech, Mr Blair told delegates: "In many ways we have a better clearer relationship than ever before between trade unions and Labour.

"You run the unions. We run the government. We will never confuse the two again.

"For the first time in 20 years, trade union leaders came into Downing Street; they are consulted, they are listened to, just as the CBI are.

"No favours, but fairness. Equality. What we promised.

"This is a government which takes decisions for the whole country."

Poet of Downing Street

But revealing a previously unknown talent for poetry, he also slipped into verse to praise the union movement for modernising.

The prime minister also insisted that most union members appreciated the improvements the government had made for ordinary people. These gains would be lost if the Tories returned to power, he said.

"Don't let anyone pretend this is not a Labour government delivering for working people," he said

He cited his government's moves to introduce a minimum wage, New Deal programmes for the young unemployed and other measures aimed at helping ordinary families.

He told his audience his office in Downing Street was often crowded with people who wanted more - usually in a just cause.

For example, he said he agreed that the £100 winter fuel payment for pensioners could be seen as too low - "Quite right too".

But he added: "It's £100 more than they got under the Tory government and people should not forget that."

Click here to listen to Tony Blair's speech

And on the minimum wage, he said: "I agree it would be fine to pay everyone everything you want - fine.

"But never forget you have only got a minimum wage because you have got a Labour government, and a Tory government would take it back off you."

'Business and unions together'

Mr Blair admitted to listening to the concerns of industry, but he said that most union members did not regard this as a "betrayal".

The prime minister said the Tories would scrap gains workers have made under Labour

His party was proud, he said, to "celebrate British entrepreneurial success."

He stressed that he would continue to encourage workers and bosses to co-operate to achieve a modern and successful economy.

He proposed a new conference for next year involving the CBI, the TUC and the government "specifically on the knowledge economy, where we think through the consequences of this technological revolution".

The BBC's Robin Oakley reports: "Union leaders liked hints of more public spending to come"

He added: "Business and employees, your members, aren't two nations divided. That's old-style thinking. That's the thinking of the past."

"Britain works best when business and unions work together," he said.

Positive - TUC leader

TGWU General Secretary Bill Morris praised Tony Blair's speech

TUC General Secretary John Monks backed the prime minister's attempt to move on the relationship between the Labour Party and the unions.

He said Mr Blair had given a "very positive account" of the future role of trade unions.

"It is time to move on from the old agenda and, as the prime minister acknowledged, the union movement has been pushing out the frontiers of modern trade unionism," he said.

Bill Morris, General Secretary of the Transport and General Workers' Union, said: "The prime minister showed that the government is truly connected to the principle of social partnership.